Background

Context

• Focus on Global South: Latin America, Sub-Saharan Africa, etc.

• Low income Countries: More affected by aid, variance in impacts depending on income levels

  source: World Bank

Background

Research Questions

• Foreign aid continues to be a primary tool of global engagement

• Few studies fully integrate regime type, donor leverage, and transparency outcomes all together.

• Can lead to more of an understanding in terms of how to fulfill donor goals in various regime types

Background

Research Questions

Today:

Literature

• Camp One: more corruption in autocracies, minimal to no impact on democracies

  – Kono et al., 2009

  – Nieto-Matiz et. al. ,2020

• Camp Two: Aid always causes corruption: regime type has no impact

  – Knack, 2003

  – Kaylvitis et al., 2012

  – Bader et al., 201

• Camp Three: Donor intent matters not regime type

  – Bermeo, 2011

  – Brown, 2005

Empirics

Argument and Theory

• Autocracies: Lack of voter base leads to uncontrolled growth in corruption

• Democracies: Corruption increases, need to appease voter base decreases it

Empirics

Data

Figure A:

Sources: Transparency International: CPI, World Bank: Income Level and Percent GNI of ODA, V-Dem: Regime Classification

Approach: Differences in Differences:

\[ \text{CPI}_{it} = \sum_{k = -4}^{10} \beta_k \cdot \mathbb{1}(\text{EventTime}_{it} = k) + \alpha_i + \gamma_t + \varepsilon_{it} \]

• \(\text{CPI}_{it}\): is the corruption score for country \(i\) in year \(t\),

• \(\mathbb{1}(\text{EventTime}_{it} = k)\): indicator for each year relative to treatment. -\(\alpha_i\): Country fixed effects -\(\gamma_t\)-:year fixed effects are included to account for time-invariant country characteristics and common shocks.

Empirics

Data

Figure B:

sources:

Empirics

Data

Figure C:

sources:

Empirics

Data

Figure D: add figure D when you figure out how to fix the N/A thing

Empirics

Findings

• Figure A: two contrasting trends:

  – Democracies: corruption decreases after an initial spike,

  – Autocracies: corruption steadily worsens following the aid shock

• Figure B: democracies have more of a lag: shows institutional checks, shows why corruption improvement in figure A is not immediate in democracies

• Figure C:

  – Autocracies: Aid goes in short term sectors,

  – Democracies: Aid goes to government

• Figure D: Protests in both

  – Democracies: decrease in corruption

  – Autocracies: corruption continues to increase

Limitations and Critqiues

• Difference-in-Differences event study assumes that treated and control countries would have followed similar paths in the absence of high ODA inflows

• Excludes sub-national differences:

  – Somaliland

• CPI is a perception-based measure, which may lag behind actual corruption changes or be biased by media coverage and international scrutiny.

• Ignores Conditionality

• Future studies could look at:

  – Sub-national variation

  – Diffrent economic levels

  – Donor type: Members of OPEC versus external sources i.e Chinao